South Korea to ban single-hull tankers by 2011

Jan. 8, 2008
South Korea will ban the entry of single-hulled tankers into its waters starting in 2011—5 years earlier than originally planned.

Eric Watkins
Senior Correspondent

LOS ANGELES, Jan. 8 -- The South Korean government will ban the entry of single-hulled tankers into its waters starting in 2011, 5 years earlier than originally planned, as the Asian nation continues to suffer from the effects of its worst-ever oil spill on Dec. 7, 2007.

"We can implement the ban sooner than planned following the oil spill," said an official of South Korea's Ministry of Maritime Affairs and Fisheries, referring to the collision between the very large crude carrier Hebei Spirit and a barge off the country's west coast.

Massive clean-up efforts are still under way and the South Korean government has yet to release a damage estimate or how much the clean-up will cost.

The South Koreans had originally planned to prevent single-hulled vessels, considered more spill-prone that double-hulled ships, from entering their waters in 2015—a start date lobbied for by the nation's oil industry and ministry of commerce.

Modern tankers are fitted with two hulls to reduce the risk of an oil spill, and are usually more expensive to hire.

Hebei Spirit spill
The Hebei Spirit was fitted with one hull, according to Lloyd's Register-Fairplay, which assigns ship-registration numbers. An international ban on such ships is due to start in 2010, with South Korea one of 146 nations that pledged to uphold the ban.

But last month's disaster has prompted the change of policy in Seoul as the collision between the barge and the Hong Kong-registered supertanker caused 10,500 tonnes of oil to spill into the waters off the South Korean coast.

The spill is the worst in South Korea's history and is the biggest anywhere since the Tasman Spirit leaked about 27,000 tonnes of oil at the port of Karachi in Pakistan in July 2003, according to Tim Wadsworth, technical support manager for the International Tanker Owners Pollution Federation Ltd.

The Hebei Spirit leak was estimated at almost a third of the 37,000 tons spilled into Alaska's Prince William Sound by the Exxon Valdez in 1989, according to ITOPF.

At the time of the Hebei disaster, reports said South Korea was struggling to contain the spillage, which occurred near Hyundai Oilbank Co.'s refinery on the nation's west coast.

The South Korean government dispatched 30 patrol boats, 4 helicopters, and 10 oil-spill control vessels to the site where the collision punched three holes on the ship's side and spilled the oil, according to the Ministry of Maritime Affairs and Fisheries.

Although the Hebei Spirit had stopped leaking by then, the slick from the spill was estimated at 7.4 km long and 2 km wide.

Per Mansson, a tanker broker at Nor Ocean Stockholm AB, said South Korean oil companies are probably the world's biggest users of single-hull tankers, but that the collision might cause a change of policy in South Korea that would have a tremendous effect on the market.

South Korea, along with India, dominates the fixture lists of single-hull tankers, which no longer trade to Europe and North American ports.

Some 60% of crude imported to South Korea is shipped on single-hull tankers, about two to three times the market average, according to a report by Citigroup Global Markets. The report said 173 single-hull tankers were fixed until mid-December to South Korea, from the 628 single-hull VLCC fixtures in 2007.

Within days of the spill, the demand for double-hulled VLCCs rose. In its weekly report on tanker shipping rates, EA Gibson said the collision and oil spill "could be a trigger for a major shift in the tanker industry."

Analysts also said that smaller number of available large tankers, and higher daily rates to charter them, could prompt many charters to split their cargoes on to smaller ships such as Aframaxes, leading to increased rates for these vessels as well.

Meanwhile, Hyundai Oilbank, the company that received the oil from the single-hull Hebei Spirit, has already indicated it plans to change its own chartering practices.

In a statement, Hyundai Oilbank, while awaiting government directives on single-hulled ships, said it would revise its chartering policy following the Hebei Spirit spill by increasing the number of double-hulled VLCC chartering.

Contact Eric Watkins at [email protected].